Employers are becoming increasingly aware of the role employee benefits can play in recruitment, retention and employee engagement. Many know, for instance, that in order to maintain a productive, engaged workforce and to attract and retain talent, their employee benefits offering needs to be competitive.
What is becoming evident is that there appears to be a missing link between employers’ understanding of benefits provision and why it’s fundamental to a business strategy. “It’s difficult for benefits to reach the board level agenda without clear and numerical evidence of the impact on the wider business strategy and return on investment,” explains Helen Payne, Client Director at Aon Employee Benefits.
In the 2018 Aon Benefits and Trends Survey, 82% said employee engagement was their top objective for their online/flex schemes, while retention was the second highest, but 33% admitted not measuring how successful their scheme is in meeting these objectives. Over half said it was ‘extremely important’ to increase employee understanding and engagement with benefits and/or saving for retirement.
Furthermore, following the launch of Aon’s benchmarking tool, The Benefits Score, which offers companies a quantitative measure of their employee benefits programme, Aon carried out more than 45 assessments in the early weeks of the Score being live, and found that 80% of companies said they do not measure return on investment while 72% do not carry out any kind of benchmarking analysis. Meanwhile, of the 93% of companies assessed with an online benefits platform, just 8% had a clear business case for having one.
Yet without a clear measure or obvious business case, it is difficult, if not impossible, to communicate the true value of benefits to key stakeholders.
According to Payne, The benefit Score ‘shines a bright light’ on clients’ benefits schemes in a way that has not been possible before. “It creates a business case for change that can be easily understood by your C-suite in the context of the broader corporate objectives,” she says.
Stakeholders need to recognise that although the costs associated with maintaining and implementing a benefits platform are high, there are compelling reasons why such benefits provision should be central – and not separate to - a business strategy. Even now, with the gradual erosion of certain salary sacrifice advantages which traditionally generated significant NI savings, the need to present a stronger, more robust business case to justify continued investment is more important than ever.
So having a review of how existing benefits provision stacks up against company objectives and market best practice is the first step to overarching benefits strategy benchmarking.
A number of businesses across a variety of sectors now know how their benefits measure up. Technology and communications employers appear to be close to their sector benchmark while businesses within financial services were found to be early adopters of benefits innovation although they have fallen behind the sector benchmark. But the highest score amongst those who took part in the Benefits Score exercise was from a market-leading tech company with a score of 82, well into the ‘high’ score bracket. Their near-exceptional score was due to having clearly established objectives and strategies, wide range of core and voluntary benefits, effective communication strategies, employee input into design and industry understanding.
Armed with information, managers can demonstrate the importance of investment because it explains why such provision is important. It encourages open discussion about which aspects of a benefit strategy work and which don’t.
“In an ever-evolving market with huge choice, confusion around benefits strategy can lead to a lack of action,” explains Payne. “The Aon Benefit Score gives our clients a helpful starting point from which to consider recommendations for changes that will have the biggest impact on their benefits strategy; as consultants we work with clients to help them interpret the results and to provide advice tailored to their business objectives.”
How The Benefits Score works
Key variables such as business aims and strategies and industry practice are taken into consideration, generating an overall score out of 100. This score is then compared to sector best practice and highlights areas which need addressing. Written responses and numeric employee data are used to generate the score and cover areas such as business and reward and benefits strategy, compliance, cost, employee input and engagement and employee demographics.
Evidence is everything to ensure that continued investment in benefits. For employers using The Benefit Solution (TBS), Aon’s Online Benefit platform, benefit strategy KPIs can be measured via the client dashboard accessible from any device, 24/7. This powerful engagement and analytics tool allows you to use your own data to inform strategies that can positively impact the way your employees interact with your benefits package, and help you to build the business case for elevating the benefits discussion to the top of your organisation.
Download The Benefits Score
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